Now they must suffer", said Edward I. Koch after he lost his re-election bid to David Dinkins.
And they did.
And they will.
J. J. Hehir
Tuesday, November 4, 2008
Thursday, October 23, 2008
The Mortgage Crisis
Today, financially responsible folks who work and save see the value of their investments fall every day. Now they are expected to “spread the wealth around”, not those who signed mortgages that “they just didn’t understand”, not those who bought houses they thought they were entitled to, but couldn’t afford. Today, workers and investors are expected to carry the slackers.
And going forward, the federal government will throw money at the mortgage problem until the country is so in debt that the interest it owes will bury our children. Bury them in obligations they had nothing to do with.
The recent history of our government and its people is to push fiscal responsibility on to those who are responsible and on to future generations. This has to stop; it’s irresponsible and immoral.
And going forward, the federal government will throw money at the mortgage problem until the country is so in debt that the interest it owes will bury our children. Bury them in obligations they had nothing to do with.
The recent history of our government and its people is to push fiscal responsibility on to those who are responsible and on to future generations. This has to stop; it’s irresponsible and immoral.
Friday, October 17, 2008
My take on the stock market – October 17, 2008
As I write, the stock market has suffered a year of moderate decline followed by two weeks of steep declines. This is a consequence of the incredible lending practices of the past five years. People now think that their investments are going to be worthless and they should retreat from the market while they can. Depending on your circumstances, this could be a mistake. If you do not need to sell your stock market investments any time soon, you should either “stay the course” as John Bogle advises or buy as Warren Buffet is doing.
Friday, September 26, 2008
Tuesday, September 23, 2008
Washington must heed fiscal alarm bell
Dave Walker's Op-Ed in the Financial Times
Published: September 22 2008
Dave Walker is president and chief executive of the Peter G Peterson Foundation and former Comptroller General of the United States
What do AIG, Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers and Merrill Lynch have in common? Some thought that these companies were too big to fail. They were wrong: all of these companies have either filed for bankruptcy, been "bailed out" by the government, or, owing to the sub-prime crisis, have been acquired. Over the weekend, the US government went one step further, with its proposals for an estimated $700bn (€493bn, £391bn) bail-out to ease the credit crisis.
The US government truly is too big to fail. However, there are disturbing parallels between the factors that led to the sub-prime crisis and the deteriorating financial condition and fiscal foundation of our federal government. These similarities ought to ring an alarm bell for Congress and the presidential candidates. The question is, will they hear it and wake up?
The first parallel relates to the dangerous disconnect between the parties who benefit from various imprudent practices and those who bear the related risk and ultimately pay the price. In the housing crisis, some originators of unwise mortgages have not paid a price for their actions. In the case of our federal government, politicians have increased spending, expanded government entitlement programs, and agreed tax cuts without considering their long-term costs.
Second, a lack of transparency facilitated the crisis. Banks and other financial institutions created off-the-books entities so that regulators would find it hard to track the risks to their health. The US federal budget does not reflect the government's huge off-balance sheet and unfunded promises, commitments and contingencies that stood at over $40,000bn at September 30, 2007.
Another similarity has been the role of credit rating agencies, which blithely rated securitized mortgage packages without looking at the weaknesses of underlying mortgages. In similar fashion, purchasers of American debt issued by Fannie Mae and Freddie Mac assumed that it was guaranteed by the US government. The resulting expectation gap among foreign investors resulted in their demand that the government make explicit what until then had been only an implicit guarantee. The result is that the US taxpayer now stands behind more than $5,000bn in mortgages. It is too soon to say what the ultimate cost will be to taxpayers.
Finally, while there were private sector and executive branch failures, Congress also bears responsibility. It writes the laws and is charged with oversight of these formerly quasi-governmental entities and regulatory agencies. The sad but simple truth is that our country has strayed a long way from the principles and values that made this nation great. Washington has grown increasingly out of touch and out of control. Personal responsibility and stewardship for our collective future are largely absent in too many government areas. This must change.
Are there lessons from the sub-prime crisis? The answer is yes. The recent actions had to be taken because the government failed to establish an effective regulatory structure in connection with mortgages, derivatives and other securities. Greed was rampant. Fannie Mae and Freddie Mac strayed from their original mission, becoming too focused on profit and personal gain rather than their public purpose. Lax oversight was facilitated by powerful Wall Street lobbies and the lobbying of Fannie Mae and Freddie Mac.
Beyond the turmoil for banks and homeowners, however, there is a super-sub-prime crisis brewing in Washington. Our fiscal policies have created a disconnect between today's citizens and future taxpayers. Today's taxpayers benefit from high government spending and low taxes, while future generations are expected to pay the bill. Our real challenge is where we are headed on our do-nothing fiscal path.
Washington has charged everything to the nation's credit card - engaging in tax cuts and spending increases without paying for them. Washington's imprudent, unethical and even immoral behaviour is facilitated by a lack of transparency. For example, as of September 30, 2007 the federal government was in a $53,000bn dollar fiscal hole, equal to $455,000 per household and $175,000 per person. This burden is rising every year by $6,600-$9,900 per American. Medicare represents $34,000bn of this deficit and the related Medicare trust fund is set to run dry within 10 years. The Social Security programme is projected to have negative cash flow within about 10 years.
What needs to be done? First, we need leadership from the presidential candidates and members of Congress. We need to re-impose tough budget controls, constrain federal spending, decide which Bush tax cuts will stay, and engage in comprehensive reform of our entitlement, healthcare and tax systems. A bipartisan commission that would make recommendations for an up-or-down vote by Congress would be a positive step to making this a reality.
While the US government is too big to fail, continuing on our current path will have adverse implications for our economy and international standing. The sooner Washington acts, the better. Our country, children and grandchildren deserve no less. In the interim, the government needs to decide how to account for its radical actions in the financial statements for the year to September 30. The Treasury has a responsibility to disclose and account for these costs adequately and the Government Accountability Office has a duty to insist the Treasury does so.
Copyright The Financial Times Limited 2008
Published: September 22 2008
Dave Walker is president and chief executive of the Peter G Peterson Foundation and former Comptroller General of the United States
What do AIG, Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers and Merrill Lynch have in common? Some thought that these companies were too big to fail. They were wrong: all of these companies have either filed for bankruptcy, been "bailed out" by the government, or, owing to the sub-prime crisis, have been acquired. Over the weekend, the US government went one step further, with its proposals for an estimated $700bn (€493bn, £391bn) bail-out to ease the credit crisis.
The US government truly is too big to fail. However, there are disturbing parallels between the factors that led to the sub-prime crisis and the deteriorating financial condition and fiscal foundation of our federal government. These similarities ought to ring an alarm bell for Congress and the presidential candidates. The question is, will they hear it and wake up?
The first parallel relates to the dangerous disconnect between the parties who benefit from various imprudent practices and those who bear the related risk and ultimately pay the price. In the housing crisis, some originators of unwise mortgages have not paid a price for their actions. In the case of our federal government, politicians have increased spending, expanded government entitlement programs, and agreed tax cuts without considering their long-term costs.
Second, a lack of transparency facilitated the crisis. Banks and other financial institutions created off-the-books entities so that regulators would find it hard to track the risks to their health. The US federal budget does not reflect the government's huge off-balance sheet and unfunded promises, commitments and contingencies that stood at over $40,000bn at September 30, 2007.
Another similarity has been the role of credit rating agencies, which blithely rated securitized mortgage packages without looking at the weaknesses of underlying mortgages. In similar fashion, purchasers of American debt issued by Fannie Mae and Freddie Mac assumed that it was guaranteed by the US government. The resulting expectation gap among foreign investors resulted in their demand that the government make explicit what until then had been only an implicit guarantee. The result is that the US taxpayer now stands behind more than $5,000bn in mortgages. It is too soon to say what the ultimate cost will be to taxpayers.
Finally, while there were private sector and executive branch failures, Congress also bears responsibility. It writes the laws and is charged with oversight of these formerly quasi-governmental entities and regulatory agencies. The sad but simple truth is that our country has strayed a long way from the principles and values that made this nation great. Washington has grown increasingly out of touch and out of control. Personal responsibility and stewardship for our collective future are largely absent in too many government areas. This must change.
Are there lessons from the sub-prime crisis? The answer is yes. The recent actions had to be taken because the government failed to establish an effective regulatory structure in connection with mortgages, derivatives and other securities. Greed was rampant. Fannie Mae and Freddie Mac strayed from their original mission, becoming too focused on profit and personal gain rather than their public purpose. Lax oversight was facilitated by powerful Wall Street lobbies and the lobbying of Fannie Mae and Freddie Mac.
Beyond the turmoil for banks and homeowners, however, there is a super-sub-prime crisis brewing in Washington. Our fiscal policies have created a disconnect between today's citizens and future taxpayers. Today's taxpayers benefit from high government spending and low taxes, while future generations are expected to pay the bill. Our real challenge is where we are headed on our do-nothing fiscal path.
Washington has charged everything to the nation's credit card - engaging in tax cuts and spending increases without paying for them. Washington's imprudent, unethical and even immoral behaviour is facilitated by a lack of transparency. For example, as of September 30, 2007 the federal government was in a $53,000bn dollar fiscal hole, equal to $455,000 per household and $175,000 per person. This burden is rising every year by $6,600-$9,900 per American. Medicare represents $34,000bn of this deficit and the related Medicare trust fund is set to run dry within 10 years. The Social Security programme is projected to have negative cash flow within about 10 years.
What needs to be done? First, we need leadership from the presidential candidates and members of Congress. We need to re-impose tough budget controls, constrain federal spending, decide which Bush tax cuts will stay, and engage in comprehensive reform of our entitlement, healthcare and tax systems. A bipartisan commission that would make recommendations for an up-or-down vote by Congress would be a positive step to making this a reality.
While the US government is too big to fail, continuing on our current path will have adverse implications for our economy and international standing. The sooner Washington acts, the better. Our country, children and grandchildren deserve no less. In the interim, the government needs to decide how to account for its radical actions in the financial statements for the year to September 30. The Treasury has a responsibility to disclose and account for these costs adequately and the Government Accountability Office has a duty to insist the Treasury does so.
Copyright The Financial Times Limited 2008
Tuesday, September 9, 2008
Does Experience Matter In Government?
Both Barack Obama and Sarah Palin are considered unfit to govern because of their lack of experience. He was a community organizer; she was a small town mayor. So what has the Washington crowd done lately with their experience?
Sunday, August 31, 2008
Our new home in Old Niskayuna
I have been reading up on slate roofs lately. I don’t know if buying a 65-year-old house in Old Niskayuna, NY with a slate roof with a 75-year-old life expectancy is going to be a very, very expensive can of worms. I kind of think it will be. We’ll see for sure after the first of November.
Saturday, August 16, 2008
President Bush is our Batman
Brian Popkin of Denville, NJ wrote a letter to the Daily Record editor that I found interesting. Here it is.
President Bush is our Batman - August 16, 2008
While I appreciate the public for making the great "Dark Knight" movie so successful, I feel many are missing the movie's point.
Batman's campaign had made the streets of Gotham safer at the night. This environment allowed for an aggressive district attorney like Harvey Dent to rise to power. Because of Batman, ordinary people like Dent were taking on dangerous crooks. He was a handsome, ambitious, young reformer. He was aided by a friendly press focused on his good side. They were not looking at skeletons in his closet. Dent reminds me of John Edwards and even Barack Obama.
People wanted to replace Batman with Dent. Batman's methods, which were allowed for years, were now considered beyond the pale. They wanted Batman locked up and prosecuted. The more the Joker's crime spree escalated, the more they wanted to acquiesce to him. The irony was that Batman was the only one who could stop the Joker.
This reminds me of our current situation. The whole world wants Obama for president. He will reverse Bush's "failed policies." These are the same policies that have created the success following the surge by U.S. troops in Iraq. These policies have foiled every terrorist attack on our soil since Sept. 11. The thinking is, now that the troop surge has made Iraq safer, we can leave. Now that people are concerned about Bennigan's [a local bankrupt restaurant] closing more than foreign policy, we can afford a president with no foreign policy experience. We can stop fighting terrorism and stop listening to terrorist phone calls. We can close Guantánamo and free the prisoners. Lock up the Batman.
The only problem is once you get rid of Batman; all you can do is hope the Joker doesn't return.
BRIAN POPKIN
Denville
President Bush is our Batman - August 16, 2008
While I appreciate the public for making the great "Dark Knight" movie so successful, I feel many are missing the movie's point.
Batman's campaign had made the streets of Gotham safer at the night. This environment allowed for an aggressive district attorney like Harvey Dent to rise to power. Because of Batman, ordinary people like Dent were taking on dangerous crooks. He was a handsome, ambitious, young reformer. He was aided by a friendly press focused on his good side. They were not looking at skeletons in his closet. Dent reminds me of John Edwards and even Barack Obama.
People wanted to replace Batman with Dent. Batman's methods, which were allowed for years, were now considered beyond the pale. They wanted Batman locked up and prosecuted. The more the Joker's crime spree escalated, the more they wanted to acquiesce to him. The irony was that Batman was the only one who could stop the Joker.
This reminds me of our current situation. The whole world wants Obama for president. He will reverse Bush's "failed policies." These are the same policies that have created the success following the surge by U.S. troops in Iraq. These policies have foiled every terrorist attack on our soil since Sept. 11. The thinking is, now that the troop surge has made Iraq safer, we can leave. Now that people are concerned about Bennigan's [a local bankrupt restaurant] closing more than foreign policy, we can afford a president with no foreign policy experience. We can stop fighting terrorism and stop listening to terrorist phone calls. We can close Guantánamo and free the prisoners. Lock up the Batman.
The only problem is once you get rid of Batman; all you can do is hope the Joker doesn't return.
BRIAN POPKIN
Denville
Tuesday, August 12, 2008
Clueles Investing
I have started a blog on personal finance and investment matters. You may view it at http://simoncucle.blogspot.com/
The Democrat Party and the Republican Party
There are differences and a similarity between the Democrat Party and the Republican Party. First the similarity, both parties like to spend, and spend, and spend. That’s how their office holders get re-elected.
The differences are that the Democrats will tax you into oblivion in the here and now to support their spending. The Republicans will put your children and your children’s children into lock with their borrowing to support their spending.
At least the Democrats put their jobs on the line. If their taxing and spending get too out of hand they can be voted out of office. None of that for the Republicans, those cowards, they will be long gone and retired when their bills come due and your kids have to pay for their borrowing.
The differences are that the Democrats will tax you into oblivion in the here and now to support their spending. The Republicans will put your children and your children’s children into lock with their borrowing to support their spending.
At least the Democrats put their jobs on the line. If their taxing and spending get too out of hand they can be voted out of office. None of that for the Republicans, those cowards, they will be long gone and retired when their bills come due and your kids have to pay for their borrowing.
Tuesday, August 5, 2008
Monday, July 21, 2008
John McCain's Military Service
Fred Kanter of Mountain Lakes wrote in our daily newspaper the fact that Senator John McCain served in the military does not necessarily qualify him to be President, and I agree. It is what he did not do that qualifies him to be President. While a P.O.W. and the son of a U.S. Navy admiral he had the opportunity to go home. He refused, because the Vietnamese would not include his fellow prisoners. That qualifies him to be President.
Letter to the Monterey, MA Volunteer Fire Dept.
Mountain Lakes, NJ 07046
July 3, 2008
Monterey Fire Department
P.O. Box 99
411 Main Road
Monterey, MA 01245
Dear Chief Ray Tryon,
Recently, I was vacationing with my family at Lake Garfield when I took sick at three in the morning. My wife called 9-11, and in a very short time, Captain Mark Makuc and a group of Monterey firefighters were at my side assisting me.
The people of Monterey are very fortunate to have citizens who get out of bed at 3:00 AM to help a stranger. I appreciate that they did that for me.
I am enclosing a check for $200 to add to the Department’s training and/or equipment fund, or to just have a beer on me.
Yours truly,
Joseph J. Hehir
July 3, 2008
Monterey Fire Department
P.O. Box 99
411 Main Road
Monterey, MA 01245
Dear Chief Ray Tryon,
Recently, I was vacationing with my family at Lake Garfield when I took sick at three in the morning. My wife called 9-11, and in a very short time, Captain Mark Makuc and a group of Monterey firefighters were at my side assisting me.
The people of Monterey are very fortunate to have citizens who get out of bed at 3:00 AM to help a stranger. I appreciate that they did that for me.
I am enclosing a check for $200 to add to the Department’s training and/or equipment fund, or to just have a beer on me.
Yours truly,
Joseph J. Hehir
Sunday, May 11, 2008
The New Jersey mess and Mr. Roberts
Monday, May 5, 2008
Assembly Speaker Joseph J. Roberts Jr., a legislative leader in one of the most corrupt and fiscally irresponsible states in the United States, thinks “The creation of a statewide set of efficiency and accountability standards...” for local school boards is a great idea.
I think Mr. Roberts should get his own house in order before he tackles accountability standards for school boards, which is a local matter. Mr. Roberts and his cronies are the ones who made a mess of things in New Jersey; now he is trying to change the subject by turning the spotlight on local school boards.
Assembly Speaker Joseph J. Roberts Jr., a legislative leader in one of the most corrupt and fiscally irresponsible states in the United States, thinks “The creation of a statewide set of efficiency and accountability standards...” for local school boards is a great idea.
I think Mr. Roberts should get his own house in order before he tackles accountability standards for school boards, which is a local matter. Mr. Roberts and his cronies are the ones who made a mess of things in New Jersey; now he is trying to change the subject by turning the spotlight on local school boards.
Sunday, April 6, 2008
The 2006-2007 Budget
Dear Doctor Kazmark,
The 2006-2007 budget was discussed at the Board of Education Meeting on March 27, 2006. At that meeting you advised, in response to Mr. Dieckamp’s question about the tuition charged to Boonton Township students, “that the costs at the high school will go up no more than 3% and the increase being charged to Boonton Township is 3%.” However, the per pupil costs for the 2005-2006 and 2006-2007 school years are $16,672 and $18,221 respectively. That is a 9% year to year increase. Can you explain this discrepancy?
The advertised per pupil cost calculations for the 2005-2006 and 2006-2007 school years are $16,672 and $18,221 respectively. The difference is $1,549. If you divide that amount by the 2005-2006 per pupil cost, the result is 9%.
I do not think that such a large discrepancy (3% versus 9%) can be explained away by increases in the Lake Drive budget. Lake Drive students are 5.5% of the total student population.
Respectfully submitted,
Joseph J. Hehir
Mountain Lakes, NJ
The 2006-2007 budget was discussed at the Board of Education Meeting on March 27, 2006. At that meeting you advised, in response to Mr. Dieckamp’s question about the tuition charged to Boonton Township students, “that the costs at the high school will go up no more than 3% and the increase being charged to Boonton Township is 3%.” However, the per pupil costs for the 2005-2006 and 2006-2007 school years are $16,672 and $18,221 respectively. That is a 9% year to year increase. Can you explain this discrepancy?
The advertised per pupil cost calculations for the 2005-2006 and 2006-2007 school years are $16,672 and $18,221 respectively. The difference is $1,549. If you divide that amount by the 2005-2006 per pupil cost, the result is 9%.
I do not think that such a large discrepancy (3% versus 9%) can be explained away by increases in the Lake Drive budget. Lake Drive students are 5.5% of the total student population.
Respectfully submitted,
Joseph J. Hehir
Mountain Lakes, NJ
Sunday, March 30, 2008
The Mountain Lakes Board of Education Meeting
Four taxpayers and I attended the Mountain Lakes Board of Education meeting on March 24, to listen to the 2008-2009 budget presentation. Some would say when only five taxpayers out of 1,400 families attend a budget meeting that there is a small amount of apathy around. In defense of this seemingly lack of interest, let me explain some of the circumstances leading up to it. The meeting was scheduled long in advance for March 24th. Without much notice, the superintendent decided that there would be no school that day, turning Easter weekend into a four-day vacation, and Mountain Lakes into a ghost town. The budget meeting at 7:30 PM was scheduled for when families were returning from their long weekend, so not too many showed up. In addition, those who did come could not review the budget beforehand because the superintendent’s office was closed that day also. Further, the meeting was at the same time the Borough Council was presenting the 2008 municipal budget.
Was this foul up by design or just a coincidence?
Was this foul up by design or just a coincidence?
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